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Retail round up - The Sunday Papers
Archived article dated Sunday April 6th 2008
Tesco to take legal action, Liverpool One suffers, Debenhams in secret talks, Biggest shareholder backs Rose.
Sunday Telegraph
The fashion entrepreneur Linda Bennett has become the latest in a string of British entrepreneurs to transfer the ownership of her business to avoid the rise in capital gains tax which came into effect last night. Bennett, who founded the LK Bennett chain 18 years ago and who has earned the nickname "Queen of the Kitten Heel", is understood to have engineered the move in the past few weeks. Bennett has been seeking a buyer for her business, which she is thought to value at up to £150m, and talks with prospective bidders are understood to be continuing.
Grampian Country Food Group, the biggest supplier of meat and poultry to British supermarkets, is this weekend on the verge of securing a sale to Vion, a Dutch rival, expected to value it at about £350m. Vion has emerged as the preferred bidder for Grampian, which is one of the country's oldest food processors. The two sides are likely to enter exclusive talks to seal a deal within days, according to industry sources. Grampian's majority shareholder, Fred Duncan, stands to make tens of millions of pounds from any takeover, although the company's reported debts of around £300m make the exact size of his likely windfall unclear.
Yesterday's Telegraph reported that Tesco is to take legal action against the Guardian newspaper and its editor Alan Rusbridger after a series of articles that claimed it avoided paying £1bn in tax by using an offshore structure for property joint ventures. In a High Court writ the retailer seeks special damages for "libel and malicious falsehood", citing complaints from customers. Lucy Neville-Rolfe, Tesco's executive director of corporate and legal affairs, said: "It is very regrettable that we have had to take this step. We had hoped that the Guardian would be able to accept it had made a mistake and apologise for what it had written, but this has not happened.
Carphone Warehouse has been threatened with an injunction by the music industry unless it agrees to controversial plans to crack down on customers who download music illegally. News emerged after Carphone became the first British internet provider to reject the industry's planned "three strikes" regime that would see those who consistently download pirated material disconnected from the internet.
The Duke of Westminster, one of Britain's richest men, is facing a further setback on his £1bn Liverpool shopping centre development, due to open next month. The flagging retail market and oversupply of new shopping space across the country have conspired to restrict lettings in the 43-acre Liverpool One scheme. When it opens next month a quarter of its units will be closed and not let. Just 60 of the 80 shops in the development, which has already seen multi-million pound writedowns, will be open for business when doors open on March 29.
Virgin Megastores, the music chain that was sold to its management and changed its name to Zavvi last September, made an operating loss of £47m under its last year of ownership by Virgin. The 130-store chain also warned of "severe price deflation" in its marketplace, particularly in back catalogue sales of CDs. According to accounts filed at Companies House, Virgin Retail Limited made a "continuing operating loss" of £46.9m over the year to March 31, 2007, compared to a loss of £36.3m the year before. Sales over the period rose by 2 per cent to £341m.
Sunday Times
Debenhams has held secret talks about mounting a takeover of the menswear chain Moss Bros, it emerged this weekend. The revelation will boost hopes that Moss Bros will be able to attract a bid to top an outline offer already tabled by Icelandic retail group Baugur. Talks with Debenhams have been informal, and have now been suspended, say City sources. News of the approach will come as a shock to retail-watchers, though, who have seen Debenhams' own share price collapse from more than 200p less than two years ago to a mere 56p now. Investors are already betting that Baugur's 42p-a-share outline bid, which would value Moss Bros at just under £40m, will be bettered. Hopes of a higher counter-bid pushed Moss Bros shares to 46.75p on Friday night.
Baugur is preparing an estimated £40m takeover bid for Moss Bros, the menswear chain that hires out formalwear for weddings and other special occasions. City sources said that Baugur, which owns high-street brands such as House of Fraser and Hamleys toy store, is working on detailed bid proposals and could make an approach to the Moss Bros management team led by Philip Mountford as early as this week. The bid would come only days after shares in Moss Bros dived when it became the latest retailer to issue a profit warning before the crucial Christmas trading period.
Discount fashion retailer Ethel Austin, renowned as the grandmother of cheap chic, is on the verge of agreeing a rescue refinancing deal. It is believed Elaine Gray, the former right-hand woman of billionaire entrepreneur Sir Philip Green at value chain MK One, is behind the approach. But it is possible that the group could be put into administration. The retailer, with more than 300 shops across Britain and sales of close to £200m, has been on the watch list of insolvency professionals for months.
Financial Times Sat / Sun
Marks and Spencer won the public backing of its biggest shareholder yesterday for its plans to promote Sir Stuart Rose from chief executive to executive chairman. Brandes Investment Partners, the US investment group that holds more than 7 per cent in the retailer, issued a rare public statement expressing its support for the new board structure. The statement came a day after M&S published an open letter to shareholders outlining concessions designed to defuse the row about Sir Stuart's promotion. Amelia Morris, Brandes' director of investments, responded, saying: "We are pleased that the board has retained Stuart in the business for another three years with a structure that creates the flexibility for succession and which will revert to separate chairman and CEO after that time."
Retailers are being forced to ask landlords for delays to their rental payments and to reduce spending on stores as they struggle with worsening conditions on the high street. Increasing numbers of chains are asking to pay monthly rather than quarterly to help protect cashflows after a quiet post-Christmas quarter left tills short, aggravating fears about the effect on the property sector and the number of retail administrations. "In a weak retail market this is what happens," said Malcolm Dalgleish, head of retail at CBRE, the property agents. "Most landlords will say no to start with
The Independent on Sunday
All quoted companies will be forced to detail carbon emissions in their annual reports after the Government caved in to backbench pressure. An amendment added to the Climate Change Bill last week is expected to go on the statute books this summer. It requires quoted companies to include carbon emission information as part of their annual business reviews. These would list emissions from company cars, boilers and on-site equipment. Lord Rooker, the environment minister, bowed to pressure from a coalition of backbench MPs and non-governmental organisations - among them Christian Aid and the WWF - to include the amendment at the end of the third reading in the House of Lords.
Eat, the sandwich chain with 85 outlets, will be holding a beauty parade of corporate advisers next month to prepare for a sale which could value it up to £150m. Likely bidders include Advent International and Morgan Stanley Private Equity, which both narrowly missed out on rival chain Pret a Manger.
The Observer
American toy retailer FAO Schwarz is thought to be considering opening a flagship London store that could see it go head to head with Hamleys on Regent Street, writes Zoe Wood. The speciality toy retailer has been researching the market in what would be the first international move in its 145-year history.
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